Shareholder activism in Canada is on the rise

Investors activism is rising in Canada, reversing the traditional practice of allowing poorly managed corporations to go about their business without getting any criticism, claimed Veronika Hirsch, CIO at BluMont Capital, a subsidiary of Integrated Asset Management, during the recent Opalesque Canada Roundtable.

"Historically, Canadian investors have been very complacent about the quality of corporate management," Hirsch told the participants. "Companies have been poorly managed for decades without any criticism or repercussions, eventually falling prey to a global acquirer when valuations became depressed enough. Things have started to change, to a large extent because of U.S.-based activist hedge funds getting involved in efforts to surface value from underperforming assets of poorly managed companies. We have recently seen several management teams replaced because of investor dissatisfaction with their past performance."

Hirsh also noted that the rise in activist activities in Canada is an incredibly encouraging development for the survival of the very few world-sized companies left in Canada. In future, demanding strategic changes or replacement of management teams will become an alternative to takeovers for poorly performing companies.